In the Asia-Pacific region, stock markets displayed mixed results, despite an initial surge inspired by record highs on Wall Street and recent rate cuts by major central banks. Gains were limited as investors awaited a potential announcement regarding fiscal stimulus measures from China. The U.S. Federal Open Market Committee (FOMC) cut rates by 25 basis points to a range of 4.50-4.75%, a widely anticipated move, while removing language that suggested increased confidence in inflation’s trajectory toward the 2% target. In a press conference following the announcement, Fed Chair Jerome Powell indicated that the upcoming presidential election would not impact policy decisions in the near term; he also made it clear that he would not resign if requested to do so by President-elect Trump, whose administration appears likely to allow Powell to continue his term, set to end in May 2026.
U.S. equities experienced mostly positive movement following the election, with major indices reaching fresh record highs, particularly driven by the technology sector. The Nasdaq 100 posted the most significant gains, buoyed by large-cap companies primarily within the Communication Services, Technology, and Consumer Discretionary sectors. This upward trend in stocks was complemented by a subsequent unwinding of extreme market movements seen after Trump’s win, leading to a rebound in Treasury bonds, a decline in yields, and a weakened dollar. The major stock indices showed the following performances: the S&P 500 rose by 0.74% to 5,973, the Nasdaq increased by 1.54% to 21,102, while the Dow Jones remained flat at 43,729.
In its latest meeting, the FOMC asserted that the economy continues to exhibit solid growth, although they noted that inflation remains somewhat elevated. Powell highlighted the strength of the labor market and emphasized the Fed’s commitment to sustaining economic robustness while managing inflation. He addressed the importance of recalibrating policy without overreacting to current conditions—a balancing act that requires careful consideration of economic indicators. Downplaying the effects of rising bond yields on policy, Powell stated that while they observe such trends, it wasn’t a critical factor in their decision-making at present. Looking forward, he underscored that they will adapt policy as necessitated by future economic data.
In the Asia-Pacific trading environment, the ASX 200 index led its peers, buoyed by gains across nearly all sectors, especially financials in the wake of favorable earnings from the ANZ bank. Meanwhile, although the Nikkei 225 increased, their gains were moderated, attributed to a noted contraction in household spending. The Hang Seng and Shanghai Composite indices erased early gains as market participants adopted a cautious stance, waiting for further clarity on China’s fiscal policies post-NPC Standing Committee’s session. U.S. equity futures traded relatively flat following the prior day’s rally, while European equity futures indicated a mildly optimistic opening, reflecting a 0.2% increase in the Euro Stoxx 50 futures.
Across global currency markets, the dollar index showed little movement after losing some momentum post-election. The USD/USD pair declined somewhat after failing to maintain its position above the 1.0800 mark, while the GBP/USD pair remained steady below the 1.3000 level, buoyed by the previous Bank of England meeting where another rate cut was announced. Meanwhile, USD/JPY slipped below significant support levels. Antipodean currencies also saw declines as risk sentiment eased, with participants looking ahead to potential fiscal stimuli in China. The People’s Bank of China set its midpoint for USD/CNY lower than expected, maintaining a cautious approach as the market awaited direction.
In fixed income markets, 10-year U.S. Treasury futures maintained strength following a rebound after yields consolidated following extremes seen post-Trump’s election. European Bunds traded within a limited range, reflecting mixed data from Germany and the EU, while Japanese Government Bonds were modestly supported amid household spending contraction. Commodity markets showed subdued activity, with crude futures lacking direction under various geopolitical pressures. Spot gold eased after recent gains due to a softer dollar, while copper futures lost prior-day gains as investors projected caution ahead of the potential Chinese fiscal stimulus announcement. Bitcoin oscillated around the $76,000 level after reaching historic highs, capturing continued attention from investors.
The geopolitical landscape featured significant developments, particularly in the Middle East and Eastern Europe. In statements from Iranian leadership, a call to respond decisively to threats posed by Israel was emphasized. Concurrently, Israeli PM Netanyahu took swift action to assist Israeli citizens facing unrest in Europe following attacks in Amsterdam. The interplay of such tensions reflects the broader complexities of international relations as they continue to significantly impact local and global markets. In Eastern Europe, Ukrainian President Zelenskiy voiced concerns regarding increased military support from North Korea and underscored the lack of swift action from allies. Russian President Putin acknowledged Trump’s election and expressed a willingness to engage if the U.S. sought to restore relations, leaving the next steps in relations between these nations pending. Such geopolitical narratives are critical as they shape economic expectations and market dynamics on both regional and global scales.
